Essential Principles for the Design of Antitrust Analysis for Multisided Platforms

Posted by Social Science Research Network

Essential Principles for the Design of Antitrust Analysis for Multisided Platforms

By David S. Evans (Global Economics Group)

This paper presents some basic principles for conducting the antitrust analysis of multi-sided platforms in light of the economic learning that courts could adapt to the particulars of their jurisdictions and case laws. It has a particular focus on measuring consumer surplus for platform businesses and the implications of that for the design of sound antitrust rules. It shows how multi-sided platforms increase welfare by reducing transactions costs and resolving externalities among economic agents. Its presents normative principles for policy interventions the first of which involves considering the joint surplus for both group of customers shows how these principles apply to recent debates over privacy. The paper then develops a framework for considering antitrust rules in light of these principles given the objectives of antitrust law, error costs, and developing administrable rules. It lastly considers the competing approaches to analyzing multi-sided platforms that were presented to the Supreme Court in the American Express litigation and the court’s decision.